The conversion ratio of a convertible security may change when
A)a cash dividend is paid
B)there is a change in the market value of the security
C)a stock dividend is paid
D)there is a rights offering

Question

Quizplus · Accepted Answer

A stock dividend can change the conversion ratio because it affects the number of shares outstanding, which may require an adjustment to maintain the value of the convertible security.

The Conversion Ratio of a Convertible Security May Change When